Question 1

Accumulated depreciation is a contra-expense account that represents total depreciation taken over the life of an asset.

Accepted Answer

A) True 
 B)False

Question 2

A firm trades in an old machine with a carrying value of $20,000 for new machine that has a list price of $32,000 and a fair value of $33,000. The old machine was acquired 5 years ago at a cost of $40,000. At what value will the firm record the new machine?

Accepted Answer

A)  $20,000 
B)  $33,000 
C)  $40,000 
D)  $32,000 
A)  $20,000 
B)  $33,000 
C)  $40,000 
D)  $32,000

Question 3

A fixed asset with a five-year estimated useful life and no scrap value is sold at the end of the second year of its useful life. How would using the straight-line method of depreciation instead of the double-declining balance method of depreciation affect a gain or loss on the sale of the plant asset?

Accepted Answer

A)  A gain would be greater or a loss would be less using straight-line depreciation. 
B)  A gain would be less or a loss would be greater using straight-line depreciation. 
C)  A gain would be less or a loss would be less using straight-line depreciation. 
D)  Neither the gain or loss would be different using straight-line depreciation instead of double-declining-balance method. 
A)  A gain would be greater or a loss would be less using straight-line depreciation. 
B)  A gain would be less or a loss would be greater using straight-line depreciation. 
C)  A gain would be less or a loss would be less using straight-line depreciation. 
D)  Neither the gain or loss would be different using straight-line depreciation instead of double-declining-balance method.

Question 4

Bakiponi Corp. provides the following data from its recent financial statements: $$\begin{array} { | l | r | r | } 
\hline \text { Dollars in millions) } &  { \mathbf { 2 0 1 8 } } & { \mathbf { 2 0 1 9 } } \
\hline \text { Beginning Gross Fixed Assets } & \$ 2,140,000 & \$ 2,260,000 \
\hline \text { Ending Gross Fixed Assets } & 2,260,000 & 2,380,000 \
\hline \text { Beginning Accumulated Depreciation } & 1,210,000 & 1,450,000 \
\hline \text { Current year Depreciation Expense } & 240,000 & 290,000 \
\hline \text { Current year Sales Revenue } & 3,750,000 & 4,620,000 \
\hline
\end{array}$$
 What is the average age of the company's fixed assets as of the end of 2019? (Round your answer to two decimal places, X.XX.)

Accepted Answer

A)  3.21 
B)  5.00 
C)  6.00 
D)  8.21 
A)  3.21 
B)  5.00 
C)  6.00 
D)  8.21

Question 5

Under U.S. GAAP, companies are required to disclose the amount of accumulated depreciation either for each major class of fixed assets or in total for all fixed assets.

Accepted Answer

A) True 
 B)False

Question 6

How is derecognition of an asset recognized in the financial statements?

Accepted Answer

Derecognition requires that the firm rem

Question 7

IFRS permits capitalization of interest on specific borrowings related to both constructed and purchased assets.

Accepted Answer

A) True 
 B)False

Question 8

Candalibra Company incurred the following costs during the year ended December 31, 2018: $$\begin{array} { | l | l | } 
\hline \text { Laboratory research aimed at discovery of new knowledge } & \$ 300,000 \
\hline \begin{array} { l } 
\text { Costs of testing prototype and design modifications (economic } \
\text { viability not achieved) }
\end{array} & 55,000 \
\hline \begin{array} { l } 
\text { Quality control during commercial production, including routine } \
\text { testing of products }
\end{array} & 210,000 \
\hline \begin{array} { l } 
\text { Construction of research facilities having an estimated useful life of } \
12 \text { years but no alternative future use }
\end{array} & 440,000 \
\hline
\end{array}$$
 What is the total amount to be classified and expensed as research and development in 2018 under U.S. GAAP?

Accepted Answer

A)  $265,000 
B)  $565,000 
C)  $795,000 
D)  $1,005,000 
A)  $265,000 
B)  $565,000 
C)  $795,000 
D)  $1,005,000

Question 9

The useful life of a patent is 20 years or less.

Accepted Answer

A) True 
 B)False

Question 10

Following U.S. GAAP, companies are required to disclose the amount of depreciation expense for each major class of fixed assets.

Accepted Answer

A) True 
 B)False

Question 11

When more than one different type of asset is acquired in one purchase transaction, the total purchase price is allocated among the assets in proportion to their fair values.

Accepted Answer

A) True 
 B)False

Question 12

When land is purchased and an old building thereon is demolished, the total purchase price plus the demolition cost is the total capitalized value of the land.

Accepted Answer

A) True 
 B)False

Question 13

Goodwill is recorded as an intangible asset when ________.

Accepted Answer

A)  the fair value of a company's assets exceed the carrying value of those assets 
B)  the fair value of a company's assets are greater than the cost of acquiring that company 
C)  a company's exceptional quality, reputation, or capability enables it to generate exceptional earnings 
D)  one company acquires another company 
A)  the fair value of a company's assets exceed the carrying value of those assets 
B)  the fair value of a company's assets are greater than the cost of acquiring that company 
C)  a company's exceptional quality, reputation, or capability enables it to generate exceptional earnings 
D)  one company acquires another company

Question 14

Which of the following is a characteristic of intangible assets?

Accepted Answer

A)  held for resale 
B)  long-lived 
C)  monetary asset 
D)  physical existence 
A)  held for resale 
B)  long-lived 
C)  monetary asset 
D)  physical existence

Question 15

Construction costs for fences and driveways are reported on the statement of financial position as ________.

Accepted Answer

A)  current assets 
B)  intangible assets 
C)  land 
D)  land improvements 
A)  current assets 
B)  intangible assets 
C)  land 
D)  land improvements

Question 16

Depreciation is the systematic allocation of the cost of both tangible and intangible assets to expense over the assets' expected useful lives.

Accepted Answer

A) True 
 B)False

Question 17

A company recognizes a gain on the income statement whenever it sells a fixed asset for more than the net book value of the asset.

Accepted Answer

A) True 
 B)False

Question 18

Bakiponi Corp. provides the following data from its recent financial statements: $$\begin{array} { | l | r | r | } 
\hline \text { Dollars in millions) } & { \mathbf { 2 0 1 8 } } & { \mathbf { 2 0 1 9 } } \
\hline \text { Beginning Gross Fixed Assets } & \$ 2,440,000 & \$ 2,560,000 \
\hline \text { Ending Gross Fixed Assets } & 2,560,000 & 2,680,000 \
\hline \text { Beginning Accumulated Depreciation } & 910,000 & 1,110,000 \
\hline \text { Current-year Depreciation Expense } & 200,000 & 250,000 \
\hline \text { Current-year Sales Revenue } & 3,050,000 & 3,920,000 \
\hline
\end{array}$$
 What is the average remaining life of the company's fixed assets as of the end of 2019? (Round your answer to two decimal places, X.XX.)

Accepted Answer

A)  4.80 
B)  5.28 
C)  6.28 
D)  5.44 
A)  4.80 
B)  5.28 
C)  6.28 
D)  5.44

Question 19

Under U.S. GAAP, the cost of internally developed intangible assets is charged as an expense of the period in which the costs are incurred.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not a major characteristic of a fixed asset?

Accepted Answer

A)  acquired for resale 
B)  tangible in nature 
C)  expected to be used for more than one year 
D)  used in the production and sale of other assets 
A)  acquired for resale 
B)  tangible in nature 
C)  expected to be used for more than one year 
D)  used in the production and sale of other assets

Accumulated depreciation is a contra-expense account that represents total depreciation taken over the life of an asset.

A firm trades in an old machine with a carrying value of $20,000 for new machine that has a list price of $32,000 and a fair value of $33,000. The old machine was acquired 5 years ago at a cost of $40,000. At what value will the firm record the new machine?

Under U.S. GAAP, companies are required to disclose the amount of accumulated depreciation either for each major class of fixed assets or in total for all fixed assets.

How is derecognition of an asset recognized in the financial statements?

IFRS permits capitalization of interest on specific borrowings related to both constructed and purchased assets.

The useful life of a patent is 20 years or less.

Following U.S. GAAP, companies are required to disclose the amount of depreciation expense for each major class of fixed assets.

When more than one different type of asset is acquired in one purchase transaction, the total purchase price is allocated among the assets in proportion to their fair values.

When land is purchased and an old building thereon is demolished, the total purchase price plus the demolition cost is the total capitalized value of the land.

Goodwill is recorded as an intangible asset when ________.

Which of the following is a characteristic of intangible assets?

Construction costs for fences and driveways are reported on the statement of financial position as ________.

Depreciation is the systematic allocation of the cost of both tangible and intangible assets to expense over the assets' expected useful lives.

A company recognizes a gain on the income statement whenever it sells a fixed asset for more than the net book value of the asset.

Under U.S. GAAP, the cost of internally developed intangible assets is charged as an expense of the period in which the costs are incurred.

Which of the following is not a major characteristic of a fixed asset?

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

Extenssion: Ol Revenue Recognition Previous Standard

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Leases

Extension: Ol Accounting for Leases Current Standard

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

The Statement of Cash Flows

Filters

Exam 11: Long-Term Operating Assets: Acquisition, Cost Allocation

Accumulated depreciation is a contra-expense account that represents total depreciation taken over the life of an asset.

A firm trades in an old machine with a carrying value of $20,000 for new machine that has a list price of $32,000 and a fair value of $33,000. The old machine was acquired 5 years ago at a cost of $40,000. At what value will the firm record the new machine?

Under U.S. GAAP, companies are required to disclose the amount of accumulated depreciation either for each major class of fixed assets or in total for all fixed assets.

How is derecognition of an asset recognized in the financial statements?

IFRS permits capitalization of interest on specific borrowings related to both constructed and purchased assets.

The useful life of a patent is 20 years or less.

Following U.S. GAAP, companies are required to disclose the amount of depreciation expense for each major class of fixed assets.

When more than one different type of asset is acquired in one purchase transaction, the total purchase price is allocated among the assets in proportion to their fair values.

When land is purchased and an old building thereon is demolished, the total purchase price plus the demolition cost is the total capitalized value of the land.

Goodwill is recorded as an intangible asset when ________.

Which of the following is a characteristic of intangible assets?

Construction costs for fences and driveways are reported on the statement of financial position as ________.

Depreciation is the systematic allocation of the cost of both tangible and intangible assets to expense over the assets' expected useful lives.

A company recognizes a gain on the income statement whenever it sells a fixed asset for more than the net book value of the asset.

Under U.S. GAAP, the cost of internally developed intangible assets is charged as an expense of the period in which the costs are incurred.

Which of the following is not a major characteristic of a fixed asset?

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

Extenssion: Ol Revenue Recognition Previous Standard

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Leases

Extension: Ol Accounting for Leases Current Standard

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

The Statement of Cash Flows

Filters